Saturday, 11 June 2016

EU Referendum Briefing 1: Can the UK control the EU’s future if it stays a member?

Steve Peers

During the EU referendum
campaign, a number of arguments have been made that staying in the EU is risky,
because of possible future developments of the EU itself. While there will
always be someone somewhere who says they would like to see an EU army, or some
development related to the single currency, such an expression of opinion is
meaningless by itself. The fundamental
issue is whether the UK could control such developments – either by vetoing
them or opting out.

So what’s the worst that can
happen? In this post, I’ll examine in turn the main alleged risks to staying in
the EU. As we’ll see, in every single case the UK has control, either by an
opt-out or a veto. In other words, none of these things can happen without the British government’s consent.
Nearly all of them would also need our Parliament’s
consent. And the large majority – all the fundamental possible changes
to the EU that many are concerned about – would actually need the consent of theBritish public in another
referendum. (Anyway, there's nothing to stop the UK holding another referendum on EU membership in future, if it wanted to).

All of these safeguards for UK
control of further developments of the EU exist in the current law of the EU – as I will show in detail. None of them are
first created by the renegotiation of EU membership agreed this February.

I’ll look at seven issues where
the UK has control over future EU developments:

a) defence;

b) transfers of power;

c) new Member States, including Turkey;

d) taxation;

e) non-EU immigration, asylum and criminal law;

f) the single currency; and

g) the EU budget, including the UK rebate.

There's also an earlier blog post on the controversial issue of the planned EU/US trade deal (TTIP) and the NHS.

a)EU Defence and foreign policy

The UK has control over EU
defence and foreign policy measures because they are in principle taken by
unanimous vote, with only limited exceptions. On foreign policy in general,
Article 31 TEU says:

Decisions
under this Chapter shall be taken by the European Council and the Council
acting unanimously, except where this Chapter provides otherwise.

The exceptions are where there
has been a prior act or request of EU Presidents and Prime Ministers (who act
by consensus), or where the EU is implementing a prior act already agreed by
unanimity, or where the EU appoints a ‘special representative’. However, there
is a kind of ‘emergency brake’ in all these cases:

If a member of
the Council [ie a Member State government] declares that, for vital and stated
reasons of national policy, it intends to oppose the adoption of a decision to
be taken by qualified majority, a vote shall not be taken.

Also the majority voting ‘shall
not apply to decisions having military or defence implications’. It’s also
possible to apply majority voting to funding issues, but again there’s a
military and defence exception (Article 41 TEU), and also there’s an exception
for a Member State which chose to abstain on a proposal. The bottom line is
that the UK is in control of whether it has to contribute to EU foreign policy
funding.

So whether EU foreign policy
relating to Ukraine or Russia (for instance) is a good idea or not, it has not
been imposed on the UK government. Rather the government is in control, because
it could have vetoed it. This means that if EU Member States can’t agree on an
issue, there is no EU foreign policy on that issue, and they do as they like –
as in the case of the Iraq War, for instance.

Some have raised the issue of the
UK’s permanent seat on the United Nations Security Council. In fact Article
34(2) TEU refers to Member States’ seats on the Security Council,
not to any EU seat. The UK has control here, because it could veto any EU
decision that required it to give up its Security Council seat, as part of its
veto over any foreign policy matters. It’s suggested that the European
Parliament wants that to happen, but the European Parliament has no role in EU
foreign policy: Article 36 TEU says that it’s only consulted.

Anyway, a change to the UK’s
Security Council veto could only happen
by means of a change to the UN Charter, and the UK has control over that: a
veto, according to Article 108 of the Charter:

Amendments to
the present Charter shall come into force for all Members of the United Nations
when they have been adopted by a vote of two thirds of the members of the
General Assembly and ratified in accordance with their respective
constitutional processes by two thirds of the Members of the United Nations, including all the permanent members of
the Security Council.

As for defence, can there be an
EU army? Article 42(2) TEU says:

2. The common
security and defence policy shall include the progressive framing of a common
Union defence policy. This will lead to a common defence, when the European
Council, acting unanimously,
so decides. It shall in that case recommend to the Member States the adoption
of such a decision in accordance with
their respective constitutional requirements.

So the UK has control over any
possible ‘common defence’, by means of its veto. And there’s more: the ‘constitutional
requirements’ that would apply in the UK are not only parliamentary approval,
but also a referendum, according to the European Union Act
2011. In general this law sets out a ‘referendum lock’ on
further transfers of power to the EU, putting the British public in control
over any future transfers. I’ll refer to this law again several times, since it
sets many other limits on the development of the EU in future. It also requires
a referendum before any British veto over foreign policy or defence is given
up.

b) Treaty amendments and transfers of power

It’s sometimes suggested that there
might be future transfers of power from Member States to the EU, as part of the
developing single currency project (perhaps following the so-called ‘Five
Presidents Report’ on this issue) or for some other reason. This is sometimes presented as a 'superstate', or as an inevitable outcome of the EU's 'ever closer union' clause. However, the UK
has control over these developments. First of all, the UK has an opt-out from
the single currency, as discussed below. Secondly, it also has a veto over
future Treaty amendments.

There are several ways to amend
the EU Treaties, as set out in Article
48 TEU. They have two things in common: (a) the UK government has a veto
over all of them (which it used in 2011, for instance); and (b) the British
Parliament would have to approve each of them, either by voting in favour or deciding
not to vote against.

But there’s more. The European Union Act
2011, first mentioned above, also gives control to the British public
over any significant Treaty amendment, by means of a referendum. This would
apply where the UK would drop nearly any veto. It would also apply to other
transfers of powers to the EU from the UK, defined in detail as including:

a)‘the
extension of the objectives of the EU’;

b)any
‘conferring’ or ‘extension’ of any EU competences, including over ‘the
co-ordination of economic and employment policies’ (an issue in the Five
Presidents’ Report); or

c)giving
any EU ‘institution or body’ any power to give orders or impose sanctions upon
the UK.

It’s been suggested that the UK
gave up a veto relating to single currency and banking issues as part of the renegotiation
deal. This isn’t true, as the deal didn’t amend the Treaties and Parliament has
not amended the 2011 Act.

So the control over any transfer
of power from the UK to the EU is threefold: the UK government, UK Parliament
and the British public.

c)New Member States

The rules on accession of a new
Member State are set out in Article
49 TEU, as follows:

Any European
State which respects the values referred to in Article 2 and is committed to
promoting them may apply to become a member of the Union. The European
Parliament and national Parliaments shall be notified of this application. The
applicant State shall address its application to the Council, which shall act unanimously after
consulting the Commission and after receiving the assent of the European
Parliament, which shall act by an absolute majority of its component members.
The conditions of admission and the adjustments to the Treaties on which the
Union is founded, which such admission entails, shall be the subject of an
agreement between the Member States and the applicant State. This agreement shall be submitted for
ratification by all the contracting Statesin accordance with their respective constitutional requirements.
The conditions of eligibility agreed upon by the European Council shall be
taken into account.

So the UK controls whether a new
country joins the EU, by means of a veto. The ‘constitutional requirements’ are
an Act of Parliament in favour.

There has been some concern about
new Member States joining the EU in future, but in order to join each new State
must negotiate 35 chapters of detail about EU law. In 11 years’ of
negotiations, Turkey has only agreed one out of those 35 chapters. It has not
even opened many of them:

Moreover, the ‘conditions of
eligibility’ include human rights standards, which Turkey doesn’t now meet.
Cyprus would veto Turkish membership unless there’s a deal on the future of the
island. The other countries applying to join have not agreed many chapters
either.

In any event, the current Member
States can insist on a long waiting period before the free movement of persons fully
applies to new Member States. The majority of the Member States which joined
the EEC/EU after it was founded (14 out of 22) have been subject to seven-year
waiting periods before full free movement of people, and longer periods could
be applied in future.

The UK veto over enlargement
could only be dropped by a Treaty amendment, approved by the government, parliament
and public under the European Union Act 2011.

d)Taxation

The main taxes harmonised at EU
level are VAT and excise taxes. EU law sets a minimum rate for these taxes:
it’s 15% for VAT, subject to exemptions. It also defines their scope. The UK
has VAT exemptions on things like books, basic foodstuffs and children’s clothes.

While VAT is sometimes depicted
as if it is imposed by the EU upon the UK, in fact the UK has consented to all VAT laws, since
law-making in this area is subject to unanimity. The rule currently appears in
Article 113 of the Treaty on the Functioning of the European Union:

The Council
shall, acting unanimously in
accordance with a special legislative procedure and after consulting the
European Parliament and the Economic and Social Committee, adopt provisions for
the harmonisation of legislation concerning turnover taxes, excise duties and
other forms of indirect taxation.

So the UK has control in this
area, since it has consented to every VAT obligation and excise tax obligation
set by EU law. It’s the UK’s own decision to set the rate of tax for VAT and excise taxes (taxes on
alcohol, tobacco and petroleum) above the minimum level. Many people would like
to see further exemptions from VAT, such as on tampons
or environmental services; but it was the UK government that agreed to commit
itself not to lower these rates. Actually, the UK government recently agreed to
a renewal
of the 15% minimum rate. In any event, the EU has recently agreed to a more
flexible approach, which will allow VAT to be dropped on tampons and possibly
a broader range of other products and services.

It follows from the existence of
the veto that the UK has control over any future amendment to EU tax law in
these areas, including any removal of any exemption, by means of its veto.

What about other taxes? There is
little EU involvement in other areas of tax law. So, for instance, the UK is
entirely free to set rates of personal income tax, National Insurance
contributions, corporate taxation, council tax and many more. However, there is
some limited EU involvement in cross-border aspects of corporate tax, such as
the recent law which aims to tackle cross-border
tax evasion.

The EU adopts these laws on the different legal basis of
Article 115 TFEU:

Without
prejudice to Article 114, the Council shall, acting unanimously in accordance with a special legislative
procedure and after consulting the European Parliament and the Economic and
Social Committee, issue directives for the approximation of such laws,
regulations or administrative provisions of the Member States as directly affect
the establishment or functioning of the internal market.

Again it can be seen that
unanimity is the rule. So the UK has a veto. This veto is further protected by
Article 114(2) TFEU, which says that the majority voting that normally applies
to EU single market law does not apply to ‘fiscal provisions’.

Therefore the UK has control over
any new EU tax that might possibly be proposed to fund refugee and migration
costs, or upon pensions, or upon anything else. We can simply veto it.

Can these vetoes be removed? As
discussed above, due to the European Union
Act 2011, they can only be removed (in whole or part) if the Treaty is
amended with the consent of the UK government and parliament, and the British public in a referendum.

e)Asylum, non-EU migration and criminal law

The UK has an opt-out over EU
laws on non-EU migration, criminal law and policing. This is set out in Protocol
21 to the Treaties.

As regards immigration and
asylum, the UK opted out of most non-EU immigration laws, but opted in to the
first phase of asylum laws from 2003-2005, using the veto which it had at the
time to ensure that these laws did not require any change in UK asylum law. The
only substantive EU asylum laws which the UK has opted in to since 2005 are the
Dublin
III Regulation (on returning asylum-seekers back to another Member State
where they first entered) and the Eurodac
Regulation (on fingerprinting asylum-seekers to that end). The UK opted out
of recent EU laws on relocating
asylum-seekers from Italy and Greece to other Member States.

The UK also has an opt-out from
the Schengen system of open borders between Member States, and harmonised
external border controls (see Protocols
19 and 20). This includes an opt-out from the EU laws on short-term visas
(which concern stays of three months’ maximum). So the UK will not be covered
by the proposed
laws on waiving the short-term visa requirement for Turkish citizens, or
for other countries (Ukraine, Georgia, Kosovo).

For the same reason, the UK will
also not be covered by the proposed
law on a European Border Guard. While this law originally provided for the
border force to enter a Member State without its consent, that idea was dropped
during negotiations. That would anyway not have applied to the UK; and in fact
the EU court has ruled
that the UK could not opt in to the
EU law creating a border agency (the precursor to the proposed Border Guard
law) even if it wanted to, without
signing up to the whole of the Schengen system.

In the areas of criminal law and
policing (which will be the subject of a separate blog post with more detail),
the UK had a veto until 2009, when the Treaty of Lisbon came into force. Since
that date, it has had an opt-out, which it has frequently used. In particular,
it has opted out of the proposal
for a European Public Prosecutor. Note that the EU’s police agency, Europol, is
not a ‘federal police force’: the Treaty rules out ‘coercive powers’ for it, so
it cannot arrest, question or detain people. Its main role is the analysis of
police investigation data.

The abolition of the opt-outs on
immigration and asylum, Schengen and criminal law would require a Treaty
amendment subject to approval of the government and Parliament. The abolition
of the Schengen opt-out would also require a national referendum, under the European Union Act 2011. So would
participation in the European Public Prosecutor.

f) The Single Currency

The UK’s opt-out from the single
currency appears in Protocol
15 to the Treaties. Point 1 reads:

1. Unless the
United Kingdom notifies the Council that it intends to adopt the euro, it shall
be under no obligation to do so.

This protocol does not expire at
some point, as is sometimes suggested. Neither are ‘all Member States obliged
to join the euro by 2020’. So the opt-out is valid for an unlimited period.

The protocol goes on to disapply
the various EU law rules relating to the single currency. This has a number of
implications. Due to the single currency opt-out the UK cannot be subject to
austerity measures imposed by the ‘Troika’ that oversees bail-outs to Eurozone
countries, since this only applies to states which adopt the single currency.
Austerity policy in the UK is solely a decision made by our own government.

Furthermore the UK is exempt from
some EU banking laws. Most notably it is not obliged to participate in the
permanent bail-outs of Eurozone states. Only Eurozone states are involved in
that, on the basis of a separate
treaty. In fact the EU as such cannot
adopt laws on permanent bail-outs, according to the EU court.

The UK could potentially be part
of solely temporary bail-outs. But
here the law was amended to
provide a guarantee that the UK would get its money back in the event of any
default.

g)The EU budget – and the UK rebate

Of the money the UK in principle
sends to the EU, there are two key features: a) a rebate, meaning some of that
contribution is never sent at all;
and b) some EU spending back in the UK. (For an overview, see here).

It’s often suggested that the
rebate is not legally secure, and that the UK has no control over spending by
the EU. Both suggestions are false.

The rebate is set out in the EU’s
Own
Resources Decision. This does not (as some suggest) have an expiry date (other Member States’ rebates will expire
in 2020, but the UK rebate, and the law as a whole, will not). If the EU wants
to amend this law, Article 311 TFEU applies:

The Council,
acting in accordance with a special legislative procedure, shall unanimously and after consulting
the European Parliament adopt a decision laying down the provisions relating to
the system of own resources of the Union. In this context it may establish new
categories of own resources or abolish an existing category. That decision
shall not enter into force until it is approved by the Member States in accordance with their respective
constitutional requirements.

It’s clear that the UK government
can control the future of the rebate by means of a veto. Furthermore, so can
Parliament, since the ‘constitutional requirements’ for the UK referred to mean
that an Act of Parliament has to be passed for any amendment to the Own
Resources Decision. These constraints have meant that the veto has stayed in
place for over 30 years – although the UK government and parliament have agreed
to some reduction in it over that time.

It’s clear that this rebate is
not ‘conditional’, as is sometimes suggested. The UK has full control over the
rebate money and can do entirely what it likes with it.

What about EU spending back in
the EU? The basic rules on what the EU spends money on are set out in the law
on the ‘Multi-Annual Financial Framework’. The latest such law is here.
The UK does have control over the
basic features of this law, because it has a veto over it, according to Article
312(2) TFEU:

2. The
Council, acting in accordance with a special legislative procedure, shall adopt
a regulation laying down the multiannual financial framework. The Council shall
act unanimously after
obtaining the consent of the European Parliament, which shall be given by a
majority of its component members.

It’s also useful to put the EU
budget contribution into broader perspective. It’s less than 1% of UK spending
(the small red section of the graph below). So if the UK no longer paid the contribution, it would
be like getting a pay increase from £400 to £404. The average taxpayer is
paying 12p a day toward the EU.

Conclusion

As we have seen:

a)The
UK cannot be required to join an EU army without consent of the UK government,
parliament and public;

b)Treaty
amendments require the consent of the UK government and parliament, and (if
there’s any transfer of powers) the public;

c)Accession
of new Member States requires the consent of the UK government and parliament;
it is a long way off for Turkey in particular and if it ever happens, will be
subject to long periods of transition for workers to be admitted;

d)The
UK has a veto on tax issues; the UK government, parliament, and public would
have to consent to dropping it;

e)The
UK has an opt-out from EU law on asylum, non-EU migration and criminal law; the
UK government and parliament would have to consent to dropping it, and the
public would have to agree to join Schengen or the European Public Prosecutor;

f)The
UK has an opt out from the single currency and other related issues, and could
only join after the consent of the UK government, parliament and public;

g)The
UK has a veto over the basic EU budget revenue and spending rules, including
the UK budget rebate; the veto could only be dropped with the consent of the UK
government, parliament and public.

Of course, there are many other
possible criticisms of the European Union. Some may be valid, and some not. But
the argument that the UK government could be forced into any of the measures
listed above is quite clearly false and scaremongering. All of the above
possible developments are subject to the control of the UK government, and
usually our Parliament and the general public besides.

3 comments:

With France & Germany holding the line and a considerable Russian influence, which at times run counter to UK's national interests and its special relationship with US, it is hard and unnatural for UK to stay in the party.

The UK can veto EU foreign policy. But the EU cannot veto its Member States' foreign policies - hence the UK has maintained its relationship with the USA, which supports UK's membership of the EU (a consistent US policy for decades). See this from Strobe Talbott, a senior State Dept official in Bill Clinton's administration: http://www.nytimes.com/2016/04/22/opinion/brexits-threattothe-special-relationship.html?_r=0